On July 29, 2024, Centuri Holdings Inc (CTRI, Financial) released its 8-K filing detailing the financial and operating results for the second quarter ended June 30, 2024. Centuri Holdings Inc is a North American utility infrastructure services company that partners with regulated utilities to maintain, upgrade, and expand the energy network. The company operates under two primary lines of business: Gas Utility Services and Electric Utility Services.
Performance and Challenges
Centuri Holdings Inc (CTRI, Financial) reported a revenue of $672.1 million for the second quarter of 2024, a decrease from the previous year's $805.8 million. The net income attributable to common stock was $11.7 million, translating to diluted earnings per share of $0.14. Adjusted net income stood at $17.0 million, with adjusted diluted earnings per share of $0.20. The adjusted EBITDA was $68.6 million, with an adjusted EBITDA margin of 10.2%.
The company faced several challenges, including weaker than expected customer spending in multiple states due to unfavorable rate case outcomes for regulated utility MSA customers. Additionally, bid work with MSA customers was either delayed or did not materialize, impacting financial results. Despite these challenges, Centuri maintained an EBITDA margin in line with historical averages, thanks to cost reduction initiatives.
Financial Achievements
During the second quarter, Centuri Holdings Inc (CTRI, Financial) completed an initial public offering (IPO) and a concurrent private placement of common stock on the New York Stock Exchange, raising net proceeds of $328.0 million. These funds were primarily used to pay down outstanding debt. The company also secured several notable customer awards, reflecting a total multi-year estimated revenue potential of more than $400 million, and exited the quarter with a backlog totaling $4.7 billion.
Income Statement Highlights
| Segment | Revenue (Q2 2024) | Revenue (Q2 2023) | Change |
|---|---|---|---|
| U.S. Gas | $340.7 million | $391.9 million | -13.1% |
| Canadian Gas | $41.0 million | $48.1 million | -14.8% |
| Union Electric | $164.2 million | $218.2 million | -24.8% |
| Non-Union Electric | $120.5 million | $133.6 million | -9.8% |
Gross profit for the quarter was $60.5 million, down from $90.0 million in the same period last year. The U.S. Gas segment saw a significant decline in gross profit margin from 11.2% to 7.4%, primarily due to lower margins on bid work and one-time severance costs. The Canadian Gas segment, however, experienced an increase in gross profit margin from 15.8% to 22.8%, driven by favorable changes in the mix of work.
Management Commentary
"In the months since the IPO, we experienced weaker than expected customer spending in multiple states, including Illinois, California, and Maryland. This was largely due to unfavorable rate case outcomes for our regulated utility MSA customers, and we were also impacted by bid work with MSA customers that was either delayed or did not materialize. While these factors negatively affected financial results in the second quarter, our focus on cost reduction allowed us to maintain an EBITDA margin in line with historical averages. In addition, the cost saving initiatives, which we began early in Q1, have instilled discipline around capital allocation and drove solid free cash flow generation on adjusted EBITDA," said Bill Fehrman, outgoing President and CEO of Centuri.
Analysis and Outlook
Centuri Holdings Inc (CTRI, Financial) has demonstrated resilience in the face of regulatory and market challenges. The company's focus on cost reduction and capital efficiency has helped maintain profitability. The successful IPO and significant backlog provide a strong foundation for future growth. However, the company must navigate ongoing regulatory challenges and market conditions to sustain its performance.
For the full year 2024, Centuri Holdings Inc (CTRI, Financial) projects revenue between $2.5 billion and $2.7 billion, with an adjusted EBITDA margin percentage of 9.0% to 9.6%. Net capital expenditures are expected to range from $90 million to $99 million.
Investors and stakeholders can access the full earnings call and supplemental investor presentation on the company's investor relations website.
Explore the complete 8-K earnings release (here) from Centuri Holdings Inc for further details.
